Brazilian Tax Review – June 2019

Author:Gaia Silva Gaede & Associados
Profession:Gaia Silva Gaede Advogados

Brazil and Uruguay Sign a Double Taxation Convention

On June 7, 2019, Brazil and Uruguay signed a Double Taxation Convention, which contains several rules aligned with the BEPS Project (Base Erosion and Profit Shifting) minimum standards, such as general anti-avoidance rules and exchange of information among the contracting states' tax authorities.

This new DTC aims to contribute to Brazilian companies' internationalization, as well as to promote a better business environment for both countries. One must note that the DTC still needs to be ratified by the Brazilian Congress and implemented through a presidential decree in order to become effective.

Brazilian Congress Moves Forward with Tax Reform Proposal

The Lower House lawmakers recently approved a tax reform bill in the House Constitution and Justice Committee. This proposal was drafted by the Fiscal Citizenship Center ("Centro de Cidadania Fiscal" - CCiF), which is an independent institution established to consider improvements to the Brazilian tax system based on the principles of simplicity, neutrality, fairness and transparency.

The reform intends to replace the IPI, PIS/COFINS, ICMS and ISS taxes with a unique Tax on Goods and Services ("IBS"), to be levied on: (1) domestic transactions with goods, services, intangibles, assignment and licensing of rights, and lease of goods; and (2) imports of tangible and intangible goods, services, and rights. The IBS will be a non-cumulative tax, not levied on exports, and not subject to tax incentives that, directly or indirectly, reduce its tax burden.

The bill still has to be approved by the whole Lower House and the Senate in order to come into force.

The tax reform has been awaited with great expectation by the productive sector and is deemed to be the second-most important reform for recovering Brazil's economic growth, after the pension reform.

New Disclosure Requirements on Crypto Asset Transactions

After a public consultation, the Federal Revenue Office issued Normative Ruling 1,888/2019, implementing ancillary obligations on crypto asset transactions, which will become effective on August 1, 2019.

This is the first guidance from the tax authorities that specifically addresses crypto assets and crypto asset exchanges. Further information on the reporting format will be provided by the tax authorities within 60 days of the enactment date of Normative Ruling 1,888/2019

Administrative Tax Tribunal Held that Brazil-Austria DTC does not...

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